Seattle: home of Nirvana, the Space Needle, Amazon, and Microsoft. The northernmost major city in the United States, Seattle has become a hub for business, culture, entertainment, and tourism. Washington’s recent legalization of recreational marijuana has done nothing but bolster the popularity of this bustling city.
With all the hubbub surrounding this northwestern metropolis, the Emerald City is becoming more and more appealing to renters and buyers alike. If you’ve been attracted by Seattle’s growing presence on the global stage, its numerous cultural opportunities, or its free-wheeling spirit, you may be wondering whether it’s a better idea to rent or buy in this intriguing city.
The answer to the question of whether to rent vs buy in Seattle isn’t simple: it depends on a number of factors such as your current financial situation and future plans. While there’s no way to say for sure which solution is best for you, there are a few things you can look into to help you decide.
Real Estate in Seattle
When evaluating whether to rent or buy in any city, it’s important to take a good look at the current market outlook. What are the median home values in the area? Are these home values increasing or decreasing? The answers to these questions will play an important role in your decision to make a long term investment or rent short term.
The median home value in Seattle is currently $726,500 — on par with other high-end real estate markets like Brooklyn. The value does vary widely from neighborhood to neighborhood, however, with areas like First Hill touting a median home value of only $449,800, while other areas like East Queen Anne sport a cool $1,019,900 median home value.
As a whole, Seattle is experiencing a fair amount of depreciation: home values decreased by 3.0% city-wide over the past year, and they’re expected to continue sinking another 1.6% throughout the next year. On the bright side, the projections for the next year varies from neighborhood to neighborhood, just like price. East Queen Anne’s median home value is expected to grow by 1.5% this year, while First Hill’s are projected to decrease by 2.6%.
This is extremely important to take into account when deciding whether to buy or rent. When you buy a home, you are ideally making an investment that will appreciate in value (or at the very least not depreciate) so that you can make a profit when you eventually sell later on down the road.
If home values are currently experiencing a bit of a downturn, it can mean one of two things: either the market is currently overvalued and undergoing a short term correction before continuing upwards, or the market is beginning a long term downward trend with no end in sight. There’s no clear way to tell which scenario it will turn out to be, but in general it’s safe to expect that real estate values will continue to increase eventually.
Investors have an old saying: don’t try to catch a falling knife. This means that while you may be lucky and end up getting a bargain by buying in a downward trending market if you get in at the lowest point, you could also set yourself up to continue sinking with the property values if they don’t turn back up soon like you expect them to.
Overall, in markets like these it’s a good idea to wait things out a bit in order to see where and if prices begin to stabilize. This may indicate that renting short term is a good idea, at least for now. However, assuming you are planning to actually live in the property long term, it’s almost always better to buy than to rent.
Advantages of Renting
In a depreciating market like Seattle, it may be prudent to rent short term in order to get a better feel for the market before making a long term commitment to buying a home. Unlike purchasing a home, renting allows you to live somewhere and then get up and move scot-free once your lease is over. The same freedom of movement is not possible when buying a home.
If you are planning to stay in Seattle short term, the clear choice is renting, but despite the poor market outlook, the decision becomes more complicated if you do intend to live there long term.
Advantages of Buying
Buying is preferable in most cases because in contrast to renting, once your contract is over you still have ownership of your home. If you rent for long enough, you can end up paying the entire cost of the property over time but end up without any home equity. If this ends up happening to you, it can feel like throwing your money away.
Even though Seattle may be experiencing something of a market downturn, buying is preferable if you plan to stay for a sufficiently long period of time. A typical mortgage term is 10 or 30 years, so if you’re planning things with those time frames in mind, the answer to your conundrum should usually be to buy.
Buying and renting each come with their own advantages and disadvantages. If you’re young and looking to explore a different area, renting is a great way to experience new things without much commitment. However, if you’re looking for somewhere to settle down, buying a home is usually a better investment regardless of the current market climate.
If you do decide to buy a home, it’s vital that you partner with an experienced real estate agent who can help you navigate the local market. Buying a home is often a complicated process and your real estate agent will be able to answer the many questions you’re bound to have along the way. To make things even better: Clever Partner Agents have agreed to offer a $1,000 home buyer rebate on eligible homes — no negotiation necessary.
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